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The following facts apply to a convertible bond making semiannual payments: Conversion price $40/share Coupon rate 6% Par value $1,000 Yield on nonconvertible debentures of
The following facts apply to a convertible bond making semiannual payments: |
Conversion price | $40/share |
Coupon rate | 6% |
Par value | $1,000 |
Yield on nonconvertible debentures of same quality | 8.5% |
Maturity | 25 years |
Market price of stock | $34 /share |
What is the minimum price at which the convertible should sell?
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